Qualifying for the best possible mortgage rate in Canada can make a big difference in your monthly payments and long-term interest costs. However, not every borrower gets access to the lowest rates advertised online.

Fortunately, there are several proactive ways to improve the mortgage rates you qualify for. Whether you’re a first-time buyer or refinancing an existing mortgage, your credit score, income profile, and loan structure all play a role in how lenders view your application. This guide shares 5 strategic tips to help you put your best foot forward and secure the lowest rate possible.

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Key Takeaways

• Borrowers with strong credit, stable income, and low debt are more likely to qualify for better mortgage rates.
• Comparing pre-approved offers from different lenders can reveal more competitive rates than those advertised.
• A mortgage expert can help you meet lender requirements and find hidden rate discounts.

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Why Your Mortgage Rate Matters

Your mortgage rate directly impacts the amount of interest you’ll pay over time. That’s why improving the rate you qualify for is one of the smartest financial moves you can make as a homebuyer. Even a rate difference of 0.50% can translate into tens of thousands of dollars over the life of your mortgage.

For example, on a $500,000 mortgage amortized over 25 years:

• At 5.50%, your total interest paid over a 5-year term would be approximately $129,000. Over a 25-year amortization, if your interest rate never changes, you’d pay approximately $416,000 in interest.
  
• At 5.00%, your total interest paid would be approximately $117,000, saving you over $12,000 in interest alone in the first 5 years. Over a 25-year amortization, if your interest rate never changes, you’d pay approximately $372,000 in interest, saving you approximately $44,000 in interest over the life of your mortgage.
  

Tips to Secure a Lower Mortgage Rate

Securing a lower mortgage rate can make a significant difference in your monthly payments and your total cost of homeownership over time. While some factors are out of your control, many others, like your credit profile, debt levels, and how you structure your mortgage, can directly influence the mortgage rate lenders offer you. Here are some practical tips to help you qualify for a better rate and improve your financial position.

Tip #1: Strengthen Your Credit Score

Your credit score is one of the most critical factors lenders consider when offering a mortgage rate. Aim for a score of at least 680 to qualify for the most competitive mortgage rates in Canada. A score of 760 or higher can unlock the lowest available rates. In general, the higher your score, the better the rate you may be offered.

To improve your credit:

• Pay bills and credit cards on time, every time
• Avoid maxing out your credit limits
• Check your credit report for errors and correct them
• Keep older credit accounts open to lengthen your credit history

Tip #2: Lower Your Debt Service Ratios

Lenders also look at your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios, which measure how much of your income goes toward housing and total debt costs. Lower ratios show you’re less of a risk, which helps you qualify for better rates and higher loan amounts.

To improve your ratios:

• Pay down credit card balances, car loans, or personal debt.
• Increase your income (e.g. through a co-applicant or side income).
• Consider reducing your mortgage amount or adjusting your amortization period.

Tip #3: Increase Your Down Payment

The more you put down, the less you borrow, which can help you qualify for a better mortgage rate. Keeping your down payment under 20% can improve the rate you qualify for since the mortgage will still be insured, giving you access to better rates compared to uninsured mortgages. 

If you want to make a 20% down payment to avoid mortgage default insurance, you could meet the criteria to qualify for an insurable mortgage, giving you access to rates almost as low as insured. However, your purchase price cannot exceed $1 million and your amortization must remain below 25 years.

Benefits of a larger down payment:

• Reduces your loan-to-value (LTV) ratio.
• It may help you avoid default insurance (if you put down 20% or more of the purchase price).
• Can trigger rate discounts if the mortgage is insured or insurable. 

Tip #4: Choose the Right Mortgage Product

The mortgage product you choose has a direct impact on the interest rate you’re offered. Lenders price different products based on risk, flexibility, and the likelihood of early repayment, so it’s essential to understand how your choices affect your rate and long-term costs.

Factors to consider:

• Fixed vs. Variable: Variable rates could provide savings if rates fall, while fixed rates could shield you from rate increases.
• Term Length: Shorter mortgage terms (such as 1 or 3 years) typically have better rates than 5-year terms, as they require more frequent renewals, making them less risky for the lender. 
• Insured, Insurable or Uninsured: Insured mortgages (for buyers with less than 20% down payment) may come with lower rates due to lender protections, while insurable mortgages offer similar rates. Uninsured mortgages typically have higher rates. 

Tip #5: Work with a Mortgage Broker or Online Lender

Many of the best mortgage rates aren’t advertised by banks. Brokers and online platforms can shop multiple lenders on your behalf and access exclusive rates you might not find on your own.

A mortgage expert can help you:

• Find better rates than your bank offers.
• Match you with lenders based on your profile.
• Structure your mortgage to maximize savings.

Bonus Tip – Get Pre-Approved and Lock In a Rate

Pre-approval doesn’t just help you shop with confidence; it also allows you to lock in a rate for 90 to 120 days (depending on the lender). This protects you from rate increases while you search for a home, and gives you leverage if rates rise before you make an offer. If rates drop during that period, many lenders will honour the lower rate, giving you the best of both worlds and more borrowing power.

A pre-approval also gives you a clear picture of what you can afford, helps streamline your home search, and makes your mortgage application process faster once you find the right home. It’s a smart move in any market, but especially valuable when rate volatility is high.

Frequently Asked Questions (FAQ) on How to Access Lower Mortgage Rates

Final Thoughts

Getting the best mortgage rate starts with knowing what lenders look for and then actively improving your profile to make you a more attractive borrower. From improving your credit score to lowering your debt load, increasing your down payment, or working with a mortgage expert who knows the mortgage market inside and out, there are real ways to influence the rate you’re offered. And over the life of your mortgage, even a small difference in rate can add up to significant savings.

If you’re ready to see how much you could save with the right mortgage strategy, contact a nesto mortgage expert. Whether you’re comparing options, preparing to buy, or renewing soon, our experts can help you qualify for the best rate available and create a mortgage plan that supports your long-term financial goals.

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